In North Carolina, trust money must be deposited within:
Audio Lesson
Duration: 2:18
Question & Answer
Review the question and all answer choices
24 hours
Option A (24 hours) is incorrect because North Carolina does not require such immediate deposit of trust money. This would create an impractical burden on real estate offices and is not aligned with the state's regulatory framework.
3 banking days of contract acceptance
5 business days
Option C (5 business days) is incorrect because North Carolina's requirement is specifically 3 banking days, not 5 business days. Business days and banking days are different calculations, with banking days excluding holidays as well.
10 days
Option D (10 days) is incorrect because this timeframe significantly exceeds North Carolina's requirement of 3 banking days. This option represents an overly conservative approach that doesn't reflect the actual state regulation.
Why is this correct?
Option B is correct because North Carolina statute specifically requires trust money to be deposited within 3 banking days of contract acceptance. This timeframe accounts for non-business days while ensuring prompt handling of client funds, reflecting the state's consumer protection regulations.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests a critical regulatory requirement in North Carolina real estate practice regarding the handling of earnest money deposits. Understanding the timing requirements for depositing trust money is essential because it directly impacts transaction compliance and potential liability for real estate professionals. The question specifically focuses on the statutory timeframe mandated by North Carolina law for placing earnest money into a trust account. To arrive at the correct answer, students must recognize that North Carolina follows a 'banking days' standard rather than calendar days or business days. Banking days exclude weekends and holidays, creating a different calculation than standard business days. This distinction is what makes the question challenging, as many students might confuse banking days with business days. The concept connects to broader real estate knowledge regarding trust accounting requirements, which vary by state but universally exist to protect consumers' funds.
Knowledge Background
Essential context and foundational knowledge
Trust money, commonly known as earnest money, is a deposit made by a buyer to demonstrate good faith in a real estate transaction. In North Carolina, these funds are considered trust money and must be handled according to strict regulatory requirements. The 3 banking day deposit requirement exists to protect consumers by ensuring their funds are properly secured in a separate trust account rather than being commingled with the broker's operating funds. This rule is part of North Carolina's Real Estate Commission regulations governing trust accounting, which are designed to prevent misuse of client funds and ensure transparency in real estate transactions.
TBD - Trust Banking Days (3)
Remember TBD = Trust Banking Days, and the number 3. Think 'To Be Done in 3 banking days' when handling trust money in North Carolina.
For state-specific deposit questions, note whether the requirement is in banking days, business days, or calendar days. North Carolina specifically uses 'banking days' which exclude weekends and holidays.
Real World Application
How this concept applies in actual real estate practice
A buyer submits a $5,000 earnest money check to a North Carolina listing agent on Friday afternoon. The contract is accepted that same evening. The broker must deposit these funds into their trust account within 3 banking days. Since the next day is Saturday (not a banking day), the clock doesn't start until Monday. The broker has until the end of business on Wednesday (3 banking days later) to deposit the funds. Failure to do so could result in disciplinary action from the North Carolina Real Estate Commission.
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